Apple touches record high as iPad 3 sales run hot
SYDNEY/SAN FRANCISCO (Reuters) - Apple's new iPad proved to be another hot-seller on Friday, with hundreds queuing before dawn in Sydney to be the first to get their hands on the 4G-ready tablet computer as the company's share price hit $600 for the first time.
As consumers lined up around city streets to buy the iPad 3, one firm that took the device apart said Qualcomm, Broadcom, and Samsung Electronics had all held onto their prized roles as key parts suppliers.
Apple's own outlets were beaten to the punch for the first store sales by Australian phone company Telstra, which started selling in Sydney and Melbourne just after midnight, eight hours before Apple's flagship stores opened.
David Tarasenko, a 34-year-old construction manager who was the first to pick up the iPad from Telstra, said ever since Apple Chief Executive Tim Cook revealed the tablet's third iteration, he couldn't wait to get one.
"When Tim Cook announced it, it sounded like such a magical tool. I just got hyped into it, I guess," he said.
Others were happy to wait for the Apple flagship Sydney store to open, and by morning the queue outside had snaked around a city block.
"I've come from Hong Kong because this model is not available in Hong Kong. The features are very revolutionary," second-in-queue Bob Cheung told Reuters.
"I've got the first one and I skipped the second one. This is a big difference form the first one. The processing speed, memory, graphical capabilities and everything like that," said another customer, Michael Kelly.
Crowds were down on previous Apple launches, but there was still excitement as stores opened. The buzz helped propel its shares to record highs in U.S. trade on Thursday, with Apple stock touching a high of $600.01 before easing back.
It peaked half an hour after the first iPad went on sale in Australia, extending the market worth of the world's most valuable company to almost $560 billion. Only a month earlier, it had crossed $500. The stock has jumped 45 percent this year.
At the closing price of $585.56, the stock is still more expensive than the $499 starting price for a Wi-Fi-only iPad.
WAITING IT OUT
Apart from Australia, the new iPad is going on sale on Friday in nine other countries, including the United States, Canada, Singapore, France and Britain.
Elsewhere around the globe, diehards had already begun lining up in front of Apple stores in Munich, Paris, London, Singapore and Hong Kong.
Wall Street expects a strong start for the latest iPad and some analysts even expect sales of the current model to overtake the iPad 2. Apple will continue to sell the iPad 2 but dropped its price by $100 to start at $399.
Apple may sell 65.6 million iPads, according to an estimate by Canaccord Genuity analysts who also raised their target price on Apple stock to $710 from $665.
So far, the company has sold 55 million iPads since it was launched in 2010.
Tablet sales are expected to increase to 326 million by 2015 with Apple largely dominating the market, according to research firm Gartner. The iPad competes with Samsung Electronic's Galaxy and Motorola's Xyboard, among others.
IMPROVEMENT NOT INNOVATION
The third-generation iPad is seen more as a collection of incremental improvements, such as a high-definition "retina" display and a better camera, rather than a major innovation.
The inner workings of the iPad are similar to previous models, based on a "teardown" by a tinkerer from California gadget-repair firm iFixit, who queued up in Australia to get one of the new tablets and quickly took it apart for a Web blog.
iFixit cofounder Luke Soules' pre-dawn teardown at a Melbourne computer shop found Apple suppliers Qualcomm, Broadcom and Samsung had maintained their key roles in the newest iPad.
The iPad includes a Qualcomm LTE cellphone chip and a Qualcomm wireless modem for 3G and 4G. Broadcom supplies a semiconductor handling wireless tasks like WiFi and Bluetooth, according to iFixit.
The iPad's new A5X application processor, with improved graphics horsepower, is based on energy-efficient technology licensed from Britain's ARM Holding and is manufactured by Qualcomm, as in past Apple devices.
Supplying parts for Apple's iPhones and iPads, the industry's gold standards, is considered a coup for chipmakers and other manufacturers. But Apple doesn't disclose which company makes the components that go into its smartphones, and insists its suppliers keep quiet.
Analysts recommend caution in drawing conclusions from the teardowns because Cupertino, California-based Apple sometimes uses more than one supplier for a part. What is found in one iPad may not be found in others.
Still, teardowns remain a key source of information for investors interested in betting on Apple's suppliers, and the appearance of unexpected chips can move stocks.
"There are a whole lot of hedge funds out there that like to shoot first and ask questions later," said Alex Gauna, an analyst at JMP who covers technology stocks.
iFixit said the iPad's display appears to be from Samsung.
A NAND flash memory chip, used to store media like music and video, is supplied by Toshiba. Japan's Elpida provides the DRAM chips.
The iPad teardown also revealed chips from Avago Technologies, Triquint Semiconductor and Fairchild. ($1 = 0.9499 Australian dollars)
(Additional reporting by Poornima Gupta in San Francisco and Lincoln Feast and John Mair in Sydney.)
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